Large companies have begun to accelerate layoffs or freeze hiring, as recession brings ‘tech shocks’ to Wall Street.
Unfortunately, large companies have begun to accelerate layoffs or freeze hiring because their forecasts about huge valuations went up in smoke. Amazon, Google, and Facebook are a sample of those many companies. Waiting for a global recession caused by the Central Banks’ raising the cost of money to reduce inflationary pressures. Big Tech companies are firing people as a preeminent growth sector requires a lot of money. The number of people that lost their jobs is more than 80,000 according to reports.
Meta (Facebook), after its biggest dropping since its start in 2004, aim to reduce the stuff by 10%. In such a manner some departments will be eliminated. But, the company will handle the issue by allowing applications for other positions within the company, letting them 30 days before expiration, and finally firing. Also, the most possible department which is at risk is the human resource team, as the Wall Street Journal wrote. Although in the past the policy was to be fired underperforming employees. Now the tactic is for high-performing employees with a less important role to be fired.
Google, in the same way as Meta, gives 60 days to employees to find a new role internally. Upper management cares about the increased productivity and demands from its employees to be more entrepreneurial due to this difficult economic environment. Therefore, it keeps its talent in its ranks, even in a different role.
Amazon confronted an issue of slowing growth in the retail business, so the cut costs were the only quick solution. Additional 99,000 employees were fired during the second quarter of 2022. Despite the explosive growth during the Pandemic due to the increased online sales, after the first months of 2022 e-commerce declined lower than that of the dot.com crash in 2001. Moreover, within the overall cut costs will be the cancelation of the opening of new facilities.
Apple after the announcement of not increasing the production of iPhone 14 due to reduced demand, had consequences on its capitalization dropping to $2,27 trillion in September. Nevertheless, it is remaining first in the ranking of Big Tech global companies. Microsoft is third on the list having $1,77 trillion, and Mark Zuckerberg’s Meta Platforms was dropped from the top 10.
As the bear market trend remains since the big giants of technology listed on the Nasdaq 100 struggled with shrunk profits despite the short-term rally for 2 days, the question of every global investor is, what is a company that is growing at 30% and making no money worth?
by Stavros Chanidis
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